Chartered accountants question legality of child benefit cuts

The Institute of Charted Accountants in England and Wales has claimed that forthcoming changes to child benefit could be “fundamentally incompatible with the UK’s European treaty obligations” and therefore open to legal challenge, as they will not affect all EU citizens working in the UK.

David Heaton, chairman of the tax faculty at the institute, told The Daily Telegraph: “You could find yourself in a British office, sitting next to a colleague from elsewhere in Europe who is paid the same as you, has the same number of children as you and is receiving benefits for them, but who is not facing the same tax charge from HMRC as you. That is discriminatory.”

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The claim is based on the fact that some EU citizens working in the UK continue to receive family benefits from their home countries. The forthcoming cuts to UK child benefit will be enacted through a variable tax paid by families in which one partner is earning more than £50,000 per year, but the government cannot apply the tax to benefits received from other EU countries as it does not have access to the necessary salary information, says the Institute.

However, the government has rejected the claims. A spokesman said:

“We are clear that this legislation is fully compliant with EU law. Anyone who receives or whose partner receives child benefit in the UK and is resident for tax purposes will be liable for the charge whether they are a UK citizen or a migrant worker. Other countries may pay benefits to their citizens who are resident in the UK, but that does not affect the Parliament’s ability to legislate”.